Wednesday was a tough day for the grains, with Corn prices falling over 1 percent and Wheat prices lower by over 4 percent. But this is the tale of two stories. As we have highlighted several times since last fall, Corn has been showing strength, while Wheat and Soybeans have been struggling.
And this shows up on the charts. As you can see in the chart below, Corn prices (May ’15) are trading above recent lows (and well above 52 week lows). But Wheat and Soybeans are trading near 52 week lows and looking up at resistance.
Wheat and Soybeans have been trading sideways for some time, so an argument that they are “base” building could be made. But the longer these grains trade heavy (especially amidst catalysts like a US Dollar pullback), the higher the odds of another swing lower. So if they are going to stage a rally, it likely needs to happen soon.
Corn appears to be in the best position. While May ’15 Corn futures undercut the prior lows, it still held the .618 Fibonacci retracement support level. And perhaps this thrust lower in early March shook out some weak hands and set the stage for the current rally. So far, the multi-day rally has pushed Corn prices up into the high end of the February range.
If Corn can take out $4.00, it will increase the probability of a retest of the December highs. On the flip side, the March lows are now a must hold.
Grains Sector – Corn vs Wheat vs Soybeans
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No position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.